New vehicle sales up by 5.4% in May

A rise in the number of motor vehicle sales in May confirms that consumer confidence
is on the mend and the domestic economy is bullish, economists say.
Australian new motor vehicle sales rose by 5.4 per cent, seasonally adjusted, to
75,472 units in May, from 71,626 units in April, the Australian Bureau of Statistics
(ABS) said on Monday.
It was the second consecutive monthly rise in new motor vehicle sales, which grew a
modest 1.7 per cent in April, and the biggest percentage point jump in sales since
January 2005.
Vehicle sales contracted between January and March.
"This is the largest monthly gain since early 2008, and also further builds on gains
achieved in April, creating the first two month consecutive gain in this series for
quite some time," Kinetic Securities Chief economist Clifford Bennett said in a
statement.
"All of the individual states were positive, with the exception of the ACT.
"The Kinetic economic thesis that Australia would be last in and first out of the
recessionary period, is again encouraged by the emerging data stream."
Victoria was hungriest for vehicles in May, with sales rising 9.6 per cent,
seasonally adjusted, to 20,205 new cars, up from 18,439 in April.
South Australian sales rose 7.4 per cent, Tasmania's 5.5 per cent and the Northern
Territory's climbed 4.6 per cent.
The number of new motor vehicle sales in NSW grew by four per cent and Queensland
rose by 3.5 per cent.
The ACT was the only area to record a decline, with sales falling 2.4 per cent.
NAB senior economist David De Garis said the jump in vehicle sales was positive with
a modest 2.9 per cent seasonally adjusted rise in passenger vehicles being offset by
a 6.4 per cent rise in the sales of Sports Utility Vehicles (SUVs).
Sales of SUVs rose to 15,241 nationwide, or 20.2 per cent of total vehicle sales,
marginally lower than the record 20.4 per cent set in October 2007.
"These data are a modest net positive for final domestic demand in the June quarter;
sales of passenger motor vehicles are still, in April/May, down on the March quarter
average," Mr De Garis said in a statement.
"But this has been more than offset by a rebound in SUV and other vehicle sales for
example motor bikes, tractors, buses etc so that vehicle sales are on track to make
a modest contribution to business investment and domestic demand in (the second
quarter of 2009).
"Its hard to escape the conclusion that sales have been supported of late by an
overall pick up in consumer confidence, a rebound in business confidence and some
support from the continuing effects from the small business bonus tax deduction for
investment depreciation."
CommSec economist Craig James said the improvement in car sales added further weight
to the economic recovery.
"However it is still early days with employment likely to be the key dictator on how
quickly the Australian economy gets back on an expansionary path," Mr James said.
The latest ABS figures show the jobless rate hit 5.7 per cent in May, with Treasury
tipping it to peak to 8.5 per cent in 2010/11.